Best Low Cost ETFs (by Expense Ratio and AUM)

We share details on 10 low-cost ETFs with above average AUM.

kent
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Research Lead
Reviewed by: Kent Thune
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Edited by: Kent Thune

Many investors are attracted to ETFs for their low expense ratios, because keeping costs low is a contributing factor to long-term investment performance. Following this same reasoning, ETF investors are often attracted to funds with the lowest expenses. 

Learn more about why expenses and fees matter with investing, and see a list of the best low cost ETFs ranked by expense ratios and assets under management. 

Why Low Cost ETFs Can Be Good Investments 

When evaluating ETFs or mutual funds, the lowest expense ratios are almost always preferred. This is because the operational costs of managing a fund generally reduce the overall return of the portfolio. When two funds track the same index, the one with the lowest expenses will generally produce higher returns in the long run. 

Because of low expenses, ETFs can make better investments compared to mutual funds, which generally have higher fees than ETFs. For example, an ETF that tracks the performance of the S&P 500 index will often have a lower expense ratio than most mutual funds that track the same index. This is why passive, buy-and-hold investors generally prefer ETFs to mutual funds and low cost ETFs to ETFs with higher expense ratios. 

The 10 Best Low Cost ETFs by Expense Ratio and AUM 

To find the best low cost ETFs, we started with our ETF screener and selected only U.S.-listed ETFs available to retail investors and with above average assets under management, which is $5.4 billion. This eliminated zero expense ratio ETFs. Finally, since many of the top low cost ETFs have the same expense ratio, we ranked the list of ETFs from the highest AUM. 

The best low cost ETFs ranked by lowest expense ratio and AUM are: 

TickerFundExpense RatioAUM10-Yr Return
VTIVanguard Total Stock Market ETF0.03%$288.78B12.23%
VOOVanguard S&P 500 ETF0.03%$286.59B12.52%
BNDVanguard Total Bond Market ETF0.03%$88.98B1.00%
AGGiShares Core U.S. Aggregate Bond ETF0.03%$86.60B0.99%
ITOTiShares Core S&P U.S. Total Stock Market ETF0.03%$42.13B12.24%
SCHXSchwab U.S. Large-Cap ETF0.03%$32.13B12.46%
SCHBSchwab U.S. Broad Market ETF0.03%$22.13B12.20%
STIPiShares 0-5 Year TIPS Bond ETF0.03%$13.09B1.38%
SCHOSchwab U.S. Short-Term U.S. Treasury ETF0.03%$13.06B0.65%
SCHRSchwab Intermediate-Term U.S. Treasury ETF0.03%$7.83B0.97%

Vanguard Total Stock Market ETF 

The Vanguard Total Stock Market ETF (VTI) seeks to track the performance of the CRSP US Total Market Index, which is a cap-weighted index that measures the investable U.S. equities market, encompassing the entire market-cap spectrum. VTI can be a good choice for investors looking for comprehensive market equity exposure that leans more toward large caps than mid and small caps. 

  • Expense ratio: 0.03% 
  • Assets under management: $288.78B 
  • 10-year return: 12.23% 
  • As of date: January 31, 2023 

Vanguard S&P 500 ETF 

The Vanguard S&P 500 ETF (VOO) seeks to track the performance of the S&P 500 index, which is a market-cap-weighted index of U.S. large and midcap stocks. VOO can be a good choice for investors looking for pure exposure to U.S. stocks. Investors should note that VOO allocates nearly 25% of the portfolio to the top 10 holdings. 

  • Expense ratio: 0.03% 
  • Assets under management: $286.59B 
  • 10-year return: 12.52% 
  • As of date: January 31, 2023 

Vanguard Total Bond Market ETF  

The Vanguard Total Bond Market ETF (BND) seeks to track the Bloomberg US Aggregate Float-Adjusted Index, which is a market-value-weighted index of U.S. dollar-denominated, investment-grade, taxable, fixed income securities with maturities of at least one year. With over 10,000 securities in the portfolio, BND offers low -cost broad exposure to the U.S. bond market. 

  • Expense ratio: 0.03% 
  • Assets under management: $88.98B 
  • 10-year return: 1.00% 
  • As of date: January 31, 2023 

iShares Core U.S. Aggregate Bond ETF 

The iShares Core U.S. Aggregate Bond ETF (AGG) seeks to track the performance of the Bloomberg U.S. Aggregate Bond Index, which is composed of the total U.S. bond market. Thus, AGG offers investors a low -cost broadly diversified fund that averages investment-grade credit risk and intermediate-term duration in the holdings. 

  • Expense ratio: 0.03% 
  • Assets under management: $86.60B 
  • 10-year return: 0.99% 
  • As of date: January 31, 2023 

iShares Core S&P Total U.S. Stock Market ETF 

The iShares Core S&P Total U.S. Stock Market ETF (ITOT) tracks a market-cap-weighted index of all common equities listed on the NYSE and the Nasdaq. The fund’s benchmark is the S&P Total Market index, which is designed to cover the broad U.S. equity market, including large, mid, small and micro cap stocks. This broad coverage reaches approximately 90% of the U.S. equity market. 

  • Expense ratio: 0.03% 
  • Assets under management: $42.13B 
  • 10-year return: 12.24% 
  • As of date: January 31, 2023 

Schwab U.S. Large-Cap ETF 

The Schwab U.S. Large-Cap ETF (SCHX) seeks to track the Dow Jones U.S. Total Stock Market Index, which is a market-cap-weighted index of the 750 largest U.S. companies. Like other total stock market index funds, SCHX can serve as a core holding in a diversified portfolio of ETFs

  • Expense ratio: 0.03% 
  • Assets under management: $32.13B 
  • 10-year return: 12.46% 
  • As of date: January 31, 2023 

Schwab U.S. Broad Market ETF

The Schwab U.S. Broad Market ETF (SCHB) seeks to track the Dow Jones U.S. Broad Stock Market Index, which is a cap-weighted index of the largest 2,500 stocks in the U.S. SCHB provides easy access to 2,500 of the largest publicly traded U.S. companies of all market capitalizations.

  • Expense ratio: 0.03% 
  • Assets under management: $22.13B 
  • 10-year return: 12.20% 
  • As of date: January 31, 2023 

iShares 0-5 Year TIPS Bond ETF 

The iShares 0-5 Year TIPS Bond ETF (STIP) seeks to track the ICE U.S. Treasury 0-5 Year Inflation Linked Bond Index, which is a market-value-weighted index of U.S. Treasury inflation-protected securities (TIPS) with a remaining maturity of less than five years. STIP can be a good choice for investors wanting exposure to the short-term TIPS market. 

  • Expense ratio: 0.03% 
  • Assets under management: $13.09B 
  • 10-year return: 1.38% 
  • As of date: January 31, 2023 

Schwab Short-Term U.S. Treasury ETF 

The Schwab Short-Term U.S. Treasury ETF (SCHO) seeks to track the total return of the Bloomberg U.S. Treasury 1-3 Year Index, which is a market-value-weighted index of debt issued by the U.S. Treasury, excluding STRIPS, with a remaining maturity of one to three years. Securities in the index must be fixed rate and non-convertible. The fund excludes state and local government bonds and coupon issues that have been stripped from bonds. 

  • Expense ratio: 0.03% 
  • Assets under management: $13.06B 
  • 10-year return: 0.65% 
  • As of date: January 31, 2023 

Schwab Intermediate-Term U.S. Treasury ETF 

The Schwab Intermediate-Term U.S. Treasury ETF (SCHR) seeks to track the Bloomberg U.S. Treasury 3-10 Year Index, which is a market-value-weighted index of investment-grade debt issued by the U.S. Treasury with remaining maturity of three to 10 years. SCHR can be a good choice for investors wanting exposure to intermediate-term Treasury securities. 

  • Expense ratio: 0.03% 
  • Assets under management: $7.83B 
  • 10-year return: 0.97% 
  • As of date: January 31, 2023 

Zero Expense Ratio Index Funds and ETFs 

Some mutual funds and ETFs have zero fees. How can funds have 0.00% expense ratios, and how do they make money? Zero-fee ETFs and index funds eliminate direct costs to investors primarily to attract more assets. These zero-fee funds can then make money by means other than fees, such as cross-selling other products or lending stock to clients. 

While a no-cost ETF or mutual fund may sound attractive, cheaper doesn’t always mean bigger or better performance. For example, consider the performance of the SPDR S&P 500 Trust ETF (SPY) compared to a comparable zero-cost ETF, the Sofi Select 500 ETF (SFY). The three-year return for SFY, through January 31, 2023, was 9.86%, whereas SFY had a smaller return of 9.50%. 

Furthermore, SPY’s expense ratio is higher, at 0.09%, yet it still outperformed SFY, which has a 0.00% expense ratio. Thus, in the SPY versus SFY comparison, SPY wins the performance contest, even with higher expenses.

In summary, investors should do their homework on funds with zero expense ratios before buying shares. 

Bottom Line 

When searching for the best ETFs for long-term investors, low expense ratios and high assets under management are included in the primary selection criteria. Often, these two criteria occur simultaneously. Thus, the largest ETFs are often the cheapest. All other things being equal, the ETFs with the lowest fees are the best performers over time. 

Kent Thune is Research Lead for etf.com, focusing on educational content, thought leadership, content management and search engine optimization. Before joining etf.com, he wrote for numerous investment websites, including Seeking Alpha and Kiplinger. 

 

Kent holds a Master of Business Administration (MBA) degree and is a practicing Certified Financial Planner (CFP®) with 25 years of experience managing investments, guiding clients through some of the worst economic and market environments in U.S. history. He has also served as an adjunct professor, teaching classes for The College of Charleston and Trident Technical College on the topics of retirement planning, business finance, and entrepreneurship. 

 

Kent founded a registered investment advisory firm in 2006 and is based in Hilton Head Island, SC, where he lives with his wife and two sons. Outside of work, Kent enjoys spending time with his family, playing guitar, and working on his philosophy book, which he plans to publish in the coming year.